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Frictional unemployment rate

Suppose that a nation has a labor force of 100 people. In January, Amy, Barbara, Carine, and Denise are unemployed: in February, those four find jobs, but Evan, Francesco, George, and Horatio become unemployed. Suppose further that every month, the previous four who were unemployed find jobs and four different people become unemployed. Throughout the year, however, the same three people- Ito, Jack, and Kelley-continually remain unemployed because they lack sufficient skills to obtain jobs.

a. What is the nation's frictional unemployment rate?

b. What is its structural unemployment rate?

c. What is its unemployment rate?

Solution Preview

A healthy economy will always include some percentage of unemployment.

Frictional unemployment: This is simply the time it takes a company to match a qualified job applicant with the right position. It also includes people who are between jobs. It is simply the time it takes for a worker, having lost his job, to register at the job agencies, read the adverts in the papers or on the internet, write or update ...

Solution Summary

This explains the concept of frictional unemployment rate and other types of unemployement rates